CBA says it spent $125m to prevent financial crimes
By Clancy Yeates
Aug. 9 (Sydney Morning Herald) -- Commonwealth Bank has spent $125 million strengthening internal systems used to detect financial crimes, and on improving how it checks the identities of customers, chairman Catherine Livingstone said as the bank seeks to contain the fallout from damaging allegations of money-laundering rule violations.
Ms Livingstone on Wednesday maintained that the lender had "no reason to believe that the allegations arose from deliberate or unethical behaviour, or any commercial motive."
Commonwealth Bank has set up a dedicated sub-committee of directors who will personally oversee its response to the scandal, she said.
These were among several actions taken by the board in response to claims from financial intelligence agency, Austrac, that CBA failed to properly report and monitor thousands of suspicious transactions.
Austrac alleges CBA failed to tell it about more than 53,000 deposits of more than $10,000 into its ATM between 2012 and 2015 - which the bank has blamed on a system error. Austrac also says the bank failed to detect or adequately report some money laundering by criminal gangs.
In an update to investors as the bank delivered a $9.9 billion profit, Ms Livingstone said the board was first made aware of a mass failure to report ATM cash deposits of more than $10,000 to authorities in 2015.
Since then, Ms Livingstone said the bank had spent $85 million strengthening its "know-your-customer" processes, which are used by banks to check customer identities.
It has also spent a further $40 million upgrading the technology it uses to detect financial crime and monitor accounts for suspicious activity, she said, as well as hiring 50 financial crime compliance experts.
Ms Livingstone said the CBA board had established a sub-committee of four directors to oversee its response to Austrac's civil action against the bank.
Ms Livingstone reiterated the board's action on Tuesday to scrap short-term bonuses for executives for this year, and signalled there could be further action to hold responsible managers to account.
"As the board considers the substance of Austrac's claims, it will take an active role in addressing any further management accountability for the alleged actions or omissions," she said.
Ms Livingstone also said that since 2016, there had been a change in senior leadership in the key roles overseeing financial crimes compliance and operational risk at the bank.
Some analysts have predicted it could be hit with a fine of up to $2.5 billion, but CBA has not publicly said what cost it may face.
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